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Citi Initiates Coverage on Watson Pharmaceuticals (WPI) with a Hold

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February 17, 2009 8:54 AM EST

Citi initiates coverage on Watson Pharmaceuticals, Inc. (NYSE: WPI) with a Hold. Price target $34.

Citi analyst says, "Our relative P/E premium of ~25%-30% to the peer group's 2010E forward looking P/E multiple is due to Watson's position in the U.S. generic market coupled with its nascent, but growing branded business, expanding distribution business. In the generics segment, Watson is positioned to benefit from recent manufacturing and supply issues from significant competitors in select niche areas. These niche opportunities include a monopoly position with Micro-K (potassium supplement with ~$100 million of brand value) and duopoly position with Toprol XL (beta-blocker antihypertensive with ~$1.5 billion of brand value)."

Watson Pharmaceuticals, Inc. (Watson) is a specialty pharmaceutical company engaged in the development, manufacture, marketing, sale and distribution of brand and generic (off-patent) pharmaceutical products.